Chattanooga City Council has more questions on Cameron Harbor tax break plan

Cameron Harbor homes are under construction near the new Blue Goose Hollow trailhead of the Tennessee Riverwalk.
Cameron Harbor homes are under construction near the new Blue Goose Hollow trailhead of the Tennessee Riverwalk.

Chattanooga officials on Tuesday unveiled a plan to get a property tax break for Cameron Harbor's developer voted in by Feb. 21, but city council members made clear they still have questions they want answered.

Mayor Andy Berke's administration is asking the council to approve a tax-increment financing deal with Evergreen Real Estate to finance the extension of M.L. King Boulevard across Riverfront Drive to the Tennessee Riverwalk. The city says the wide, landscaped boulevard across Cameron Harbor property will be a showcase entryway to one of the city's most prized assets.

Under tax-increment financing [TIF], the developer would use money that would have gone to property taxes to pay for the road extension, then deed it over to the city. Economic development officials say that will let the city keep its cash in its pocket for other projects.

But a local watchdog group, Accountability for Taxpayer Money, says building the road with a TIF deal is problematic. They say the road doesn't fit into the city's own rules for TIFs, that it uses taxpayer money to develop private property and that it costs significantly more than paying cash.

Council members raised some of those same issues Tuesday when Charita Allen, deputy administrator for the city's Department of Economic and Community Development, gave them a timeline to approve the TIF plan. The city envisions votes Feb. 20 in the city council and Feb. 21 at the Hamilton County Commission, followed by approvals from the Industrial Development Board and the state comptroller's office.

Councilman Chip Henderson went first. The city's rules say a TIF plan is suitable for economic development in a "blighted" area, but only if the development isn't primarily residential and wouldn't otherwise happen. The tax break would apply to four properties including a medical office building, a restaurant, a mixed-use building and around 180 apartments, most of which already are under construction. Henderson wondered how that fit the plan.

Allen said the project the city refers to is the road extension. The developer will have to give up land he otherwise could use for apartments. And while he plans to improve the narrow, curvy Ninth Avenue between Cameron Harbor and Alstom, the "catalytic boulevard" to the riverwalk "would not be happening to the extent we would like to see," Allen said.

Councilman Russell Gilbert asked if the city could use money from the 21st Century Waterfront bonds, but city Finance Officer Daisy Madison said that's not a good idea, as the revenue is for paying off the massive riverfront remodel, she said.

The TIF plan doesn't touch an existing revenue stream, Madison said, and the city would transfer the risk to the developer. Using cash for the M.L. King extension would mean shorting some other project, she said.

Accountability for Taxpayer Money's Helen Burns Sharp and Tresa McCallie both questioned whether the TIF plan meets the city's own rules. And attorney John Konvalinka, who works with them, questioned the legality of added funding for road improvements, subsidies for apartment development and interest costs for private development listed in the economic impact plan prepared for the TIF deal.

"This is the first test of whether you will adhere to the policy you created in 2015 or whether you will create an exception," Sharp said.

Allen promised to have answers to questions when the project next comes up at the Feb. 12 meeting of the city's Industrial Development Board.

Contact staff writer Judy Walton at jwalton@timesfreepress.com or 423-757-6416.

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